I recently had the opportunity to chat with Rajat Paharia, founder and chief product officer at Bunchball, about his new book, Loyalty 3.0, pivoting startups, and the differences between the business of games and the gamification of business.

Lilia: You were one of the first to see the potential for gaming methodology in marketing. What sparked this idea?

Rajat: The company I founded in 2005 was the right idea, but it was 2 to 3 years early to market. It was a social gaming platform, and in the process of building it, we examined what made gaming sticky. Pogo was one of the best, most used sites at the time, and they had all these statistics that they were able to stitch together into a really engaging experience. So we started building that idea into our gaming platform – for game results, but also to get people to do other things, like invite friends. We saw that it worked for motivating more than just behavior within the game itself – and that was the spark.

We realized that combining data with “gaming” concepts can be used in other interactions. We were still a small company, so we had to make a very tough decision – continue in the social gaming market, or shift to gamification for businesses. We chose the latter, but we were early to market – again. Ultimately, though, that turned out to be a good thing – because we had time to develop a strong skill set and effective motivation techniques.

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Lilia: Bunchball has helped well over 300 companies, including dozens of global brands, leverage big data to drive gaming-inspired loyalty programs. What surprised you most about how those companies have put this technology to use?

Rajat: We started with B2C applications of gamification, but the surprise has been how rapidly the business has transitioned to B2B uses. Companies are using (our solution) to motivate and train employees in sales and service, and to influence partners. B2B has taken off and is growing incredibly fast. That’s something we didn’t foresee.

It makes sense, of course. Consider that Facebook, Amazon, etc. know more about your employees than you do. Yet companies ignore tons of data about employees who spend 8 to 10 hours a day working for them and delivering enormous value. That data lives in Salesforce, Jive, Cornerstone, Successfactors and all manner of enterprise apps and systems.

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Lilia: Loyalty 3.0 requires Big Data. Does that mean only big companies can really use it for employee and partner loyalty?

Rajat: Our customers range from small companies, as small as 10 to 100 people, to the bigger ones.

What you need is to understand customers’ or employees’ motivation. Then you need data. And today we are walking data generators – constantly throwing off information that can be used to create loyalty 3.0 programs. Now, when I say Big Data, I’m referring to the large volume of data being generated by each of us as individuals – a lot of it unstructured. Those individual data streams are available to any business, not just large ones. Finally, you need Gamification – that is, you need to create data-driven motivational techniques.

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Lilia: In your book you discuss the entry of Gen Y into the worksforce. Is it that younger generation that’s really the audience for gamification?

Rajat: No. It’s based on fundamental human motivators, so it works for anyone. The demographic of our customers’ customers and employees is across the board. The thing about Gen Y is that this is the air they breathe. So to motivate them, these methods are indispensable. Gamification works for everyone, but it’s absolutely critical for the Gen Y.

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Lilia: What do you find is the most common misconception people have about gamification?

Rajat: The word is a double-edged sword. People think it’s games and entertainment. And they don’t want their employees playing games. They want them working. The reason these techniques came out of the gaming industry is because game designers have been living in data-rich environments for the last 40 years, and have had a chance to learn and develop all these techniques for motivating and driving behavior. Now the rest of the world has caught up. So gamification is really not about games at all. It’s about business results.

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Lilia: Certainly wearable computing will create a huge opportunity for gamification through increasing the volume of data even more and through the “everywhere with me” aspect of those devices. What are some other emerging trends that you see either enabling or driving the demand for gamification?

Rajat: The notion of sensors everywhere. There’s a company across the street from ours that’s making ingestable sensors, powered by stomach acids. So you can tell exactly when the medicine was taken, and how the body responds. That means we can use gamification to motivate healthy behavior like taking your medication on time. More broadly, technology is mediating a lot of what we do – and all those systems are throwing off data that can be used to motivate behavior and inspire loyalty.

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Lilia: Where should a company start when considering gamification?

Rajat: Always start by determining what you are trying to accomplish. What’s your goal? For example, “We want our channel partner sales team to contribute 10% more to the pipeline.” Gamification starts with a business mission statement. Then you decide how you will measure that. Then, understand what are the behaviors that I need to affect. Next look at users and understand what motivates them.

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Lilia: That sounds straightforward, but how would a company actually know what motivates customers or employees?

Rajat: The best way to do that is by talking to a few of them. Ask them lots of open-ended questions. You only need to talk to a few to get really smart. We break it down in the book – how to craft an experience that fits, and create automated, scalable, repeatable motivation and intervention that you can use to motivate employees or kids.

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Rajat’s book, Loyalty 3.0, launches June 18th through all the usual channels. In the meantime, you can pre-order at http://loyalty30.com/ and get extra gifts with your pre-order.

Many of my clients are neck deep in preparations for their annual sales meetings. They are creating presentations and content to get Sales jazzed about the year, and to educate them about new products, pricing, initiatives, etc.

Unfortunately after the dust settles and everyone has flown back to their patch, Marketing will moan about Sales not using all the tools they worked so hard to create. Sales will complain that they don’t have the right tools. How, after all this work, is that possible?

Part of the problem is that while marketers think about the content of sales and marketing tools, they often ignore usability. Just as with a complex product, great features (content) are only as useful as the user’s ability to access and exploit them.

To improve the usability of sales and marketing tools for your sales channel(s) and for customers, ask these questions BEFORE your create the assets.

Internal Usability Questions

How is the offering (product/service/solution) marketed and sold, exactly?

Who will use the sales/marketing assets and how?

Which form or medium is appropriate for each type of marketing and sales activity?

How much customization will be required with each use?

How will the users obtain the asset when the need for it arises?

What kinds of responses or questions are sales or marketing people likely to encounter when they use this asset?

How will we know whether the asset is useful and effective?

Usability Questions for Customers

At which points in their decision-making process does each audience need this information?

Where and how do customers find this information?

What medium is easiest for customers to access and use?

Under what conditions will they most likely use this asset? (In a meeting? On the phone? At a computer? At a dusty job site? On a plane?)

How much time will they have to interact with this asset?

Will they want to share it? (If yes, how do we make that easy?)

How will we know whether the asset is useful and valuable to customers?

Please share additional usability considerations when developing content and tools for us in sales and marketing.

Its easy to try out different tactics, different language, and different social media hubs. You quickly can learn a lot about what works and what doesn’t.

Its easy to overcome resistance inside your company by suggesting, “Let’s just run it as a test.”

3. The community is there. Deal with it.

If your company thinks its not “doing social media,” its wrong. Users, customers, and probably employees are talking about you, whether you’re there or not. Best to join the conversation than to be ignorant. (Sounds like parenting advice!)

Communities take on a life of their own. Don’t expect to control or even guide the conversation. Instead find an employee most like your audience and ask them to participate in the dialogue.

Develop a thick skin. Even within communities you create, someone will find something negative to say, and chance are, it will get disseminated. Don’t be taken by surprise, and don’t panic.

4. Lead Gen is a process, not an event.

Include calls to action – SUBTLE ones – in your content.

Give people the opportunity to “self identify” as interested though their actions and responses to many different forms of interactions (Blogs, tweets, webinars, emails, facebook fan clubs, LinkedIn group participation, etc.)

Track participation and score interest level based on those interactions. It takes time and experimentation to find the most promising patterns.

5. Traditional PR is in trouble, and reporting is dead (or at least, in the re-animation ward).

If everyone if writing about the latest events, for free, what’s a reporter left to do?

PR’s traditional emphasis on providing access to reporters and providing reporters with story no longer provides the value it once did.

Were you there? Tell us about other great insights from the evening.

Do you agree or are these suggestions off the mark? Share your B2B Lead Gen experiences via Social Media.

Companies see that greater customer focus, in the form of industry-specialized sales, marketing, services, and products will enable them to access more senior decision makers and increase deal sizes. Many are also responding to competitive pressures. The good news is that the investment is paying off.

The full report is due out next month, but meanwhile, a sneak peak at a few tidbits:

67% of B2B companies that already have some amount of industry specialization said they plan to further increase their focus on key vertical markets.

It takes two to three years to begin to realize the full benefits of specialization.

After 2 years, 70% of companies reported notable or significant impact on revenue from their investments in industry-specialized activity

Industry alliances have a big impact on brand awareness

Industry-specific case studies and quantitative ROI analysis were reported to be the most valuable industry-specific marketing tactics. Sales and marketing brochures were least effective.

Relevance – to your buyer’s context for making the purchase: company, industry, role, current business objectives and challenges, and personal interests.

Value – tangible, provable value that specifically and directly links what you’re selling to what the customer wants. Value is the intersection of results you have proved you can deliver (according to existing customers), and the results the customer is looking for.

Uniqueness – Your secret sauce. That thing that only you can deliver, or for which you are known as the best or the vanguard.

Given that segmentation is the cornerstone of marketing, I am often surprised at how little of it B-to-B companies actually do. Company size and geography are often the only criteria for segmentation, with industry being a distant third. There are other ways to slice and dice. A few ideas:

1. Look at customer characteristics such as tolerance for risk, speed of technology adoption, core business driver (are they technology-driven, customer-driven, supply-chain driven, etc.) – some may be much more likely to buy from you than others.

2. Separate customers with different levels of familiarity and experience with your company and products – your objectives and sales approach will be very different.

3. Split companies up by specific situations, business processes, or use-cases that are common to an industry or a business models. The solutions and services you offer them will vary drastically.

4. Define audiences based on their roles and responsibilities within an organization or within the decision-making process. Also consider segmenting by organization structure and culture – highly hierarchical, process-focused companies need a different sale then flat and agile organizations.

5. This seems painfully obvious, but then again, its rarely done: Segment based on actual customer objectives. This one is difficult and takes account-specific research to determine who fits where. So we tend to just assume that all companies in an industry, experiencing the same pressures (you know, the slide that says “Increased competition, Decreasing customer loyalty / ease of switching, regulation and/or deregulation, growing complexity of IT environment..”) must have the same objectives. But in fact, some are looking to get bought, some want to grow internationally, some want to raise revenue from existing customers, while other are focused on boosting profitability.

Most companies also under-utilize the insights that segmentation provies. Next time we’ll explore the uses of segment characteristics in various parts of your organization.

Comment and share some innovative segmentation criteria you’ve seen used by BtoB companies.

What advice would you give small companies trying to prioritize target industries? Robbie Baxter of Peninsula Strategies, an expert in on-line, recurring revenue streams, asked me a this very interesting question!

At companies with a sales history, industry-specific activity and resources are focused in two kinds of areas: Where most revenue is coming from already (this is by far the more common focus area), and where there is greatest opportunity for growth in the future. There can be lots of complex analysis, but in reality few big companies do much proactive planning. That’s a whole other blog, though.

With a smaller company, the first part of that equation is missing. They don’t have the sales history, references, and channels to naturally leverage into an already-active vertical market.

So, here is a try at some things I’d look at as a small business deciding where to focus.

1. What industry will value what you do most? Where will you impact mission-critical results?

2. Over time, what group of customers are going to be needing you more and more (and feeling increasing pain you can solve) due to external pressures and trends in their industry?

3. Where are you best able to access the financial decision-makers? (This is a combination of your company’s existing connections and lists, and the target industry’s propensity for doing business with small companies.)

Note that its easier to find ways to reach financial decision-makers than to change the core value of what you do or convince an industry to focus on non-critical issues. Unfortunately, many small companies start with #3 as the first, not last criteria for selecting target markets.

Please comment with your own thoughts on selecting target industries at small companies.

After 2 days at the Sales 2.0 conference, I fear we may be on the same path CRM took in its early days. Though some of the new tools are great, and MUCH easier to adopt, there is too much talk of technology, not enough about behavior and cultural changes. All things 2.0 are really about interaction and collaboration with customers. And that requires a change in mindset.

Basic example of 2.0 principles in action, that actually requires less technology. (A version of this focused on customer references was used very successfully by Beverly Chase and the BEA marketing team)

Instead of arming your reps with the new and improved power point presentation, design a white board talk. Script it with questions and discussion points instead of spiel. The result is a conversation where customers contribute ideas, and the content evolves based on the here-and-now in the room, and not what marketing thought up a month ago back at corporate.

More ideas on cultivating customer contribution and creating opportunities for interaction by turning traditional marketing into Marketing 2.0

6. In-person events – These are expensive to put on, so why spend the entire time lecturing on information that’s already in your collateral? Third party presenters can be more interesting, but any lecture can get dreary fast. Give attendees lots of time to interact with you and with each other, while you listens and takes notes. Consider a workshop rather than presentation format so that the entire event is interactive.

7. Trade Shows – This seems like a highly interactive event, but most booth staffers are so focused on doing the demos and spewing the spiel, that the opportunity to listen is lost. (I adore alliteration.) To change the mindset, make it clear you’re at the show to interact with and listen to customers, not just to be seen and heard. Set objectives of specific information you want to gather from booth visitors or people attending your sessions. Ask a few questions or give a short (5 questions max) survey before handing out the tchachkis, or organize mixers and events that have information gathering as an explicit objective.

If a widely open a conversation seems too much of leap, try these by first letting a small group of customers you know well contribute and participate, then open further when you’re comfortable managing a broader conversation.

Have you tried these or other ways to engage customers in conversations? Share them in your comment!